Britain's economy may be on life support for the next year, but the enterprise culture is far from dead. MT's annual survey of Britain's top 100 entrepreneurs and family businesses shows that some pockets of the economy are still flourishing, shrugging off the gloomy outlook that is causing so much pain economically and personally as unemployment soars.
This is the sixth MT100, but the first to be published in the teeth of a vicious recession that is biting all areas of economic activity and all regions of the UK. That Britain's top entrepreneurs are holding their own is vital in terms of economic activity and employment. Their resilience offers the hope to those joining the dole queue that flourishing businesses will one day be able to take them into employment. They are an inspiration for those trying to start up a business in these dark days.
Looking at two of our key measures of performance - growth in turnover and employment - the MT100 have done themselves proud. In five years, their average turnover has risen from £6.8m to £19.1m, a near- tripling - spreading more economic activity round the UK. More importantly, perhaps, their total headcount has risen in five years by nearly 40,000, to 87,696. A word of caution: such is the speed and ferocity of this downturn that some of our 100 members may have to shed jobs. But at least they have shown that private-sector jobs can flourish.
The MT100 are drawn from all industries, all parts of the UK and both sexes. Some have appeared on the list before and remain when performance merits it. This year's winner encapsulates all that's best about British business in world-class performance and domination of a niche market. He is Dr Mike Lynch, founder and CEO of Cambridge-based Autonomy, one of the world's leading software groups. It helps companies archive and retrieve electronically stored information regardless of the format it is kept in - unstructured data, as it's known. His firm's business is booming in the credit crunch. Little wonder: it was Autonomy software that uncovered inconsistencies in the dealing records of Jerome Kerviel, the rogue trader at Societe Generale.
But this year's MT100 is not just about software and the internet, important as they are. Fully 40 of the 100 are drawn from industry - way ahead of any other sector. Given the mauling that industry has had of late, this is remarkable. Most if not all of the 40 are involved in high-tech manufacturing, providing complex kit for the oil and gas industry and the like. Some are niche players in the UK transport sector or in providing equipment to clients in defence and aerospace. Mostly, they prefer to let their results do the talking. Who, for example, apart from those in the railway world, has heard of Fandstan Electric?
Built up by Lord Tanlaw (of the Inchcape shipping family), Fandstan is heavily involved in railway electrification. It's highly profitable, too: last year it made £8.7m on sales of £90.4m. If the Government plumps for hefty infrastructure spending in the years ahead, railway electrification would be a natural beneficiary. Indeed, transport ministers hint that a rolling programme to string the wires round the rail network is a serious runner, for environmental, operational and job-creating reasons.
Lord Tanlaw and his fellow industrialists are the British Mittelstand: niche manufacturing SMEs, often family-owned, beavering away in highly specialist fields. There are not enough of them, but at least this year we have upped our count from 27 to 40. It's a start.
The sheer diversity of the MT100 is helpful to the economy in these extraordinarily difficult times. We have eight in computers, software, internet and telecoms, representing high-tech Britain. We still manage 12 retailers, which should escape the worst that the recession can throw at them. But, significantly, there's no construction tycoon, reflecting how badly that sector is doing. Last year, we listed 10.
Sadly, the female headcount is down, too. We list just nine women; last year, it was a record 29. One of the reasons for the fall is that some of our most successful women entrepreneurs - such as Dawn Gibbins of Flowcrete - have sold their businesses. Still, what we lack in numbers we make up for in quality. An outstanding internet retailer is Natalie Massenet, who founded online fashion boutique Net-a-porter.com in 2000 after stints as fashion editor at Women's Wear Daily and Tatler.
Britain's burgeoning Asian enterprise culture is also well represented, with seven in our list (against five last year). They are drawn from all over Britain and in sectors ranging from food production to computers and distribution. But what is missing is any sudden growth in entrepreneurs from the Muslim community.
We still see the dominance of London and the South East, with 30 from this region. This is a fall from 33 last year and 44 on our 2006 list, perhaps reflecting the negative economic impact on the ranks of City and financial service entrepreneurs. Also doing well are the Midlands with 16, the North West (14), the South West (12) and the Yorkshire area at 10.
We have taken care to identify entrepreneurs who are as financially robust as it is possible to be today. Though we concentrate on sales growth, we keep one eye on profits too, and love our entrepreneurs to have steadily increasing profits, which they re-invest in the firm rather than take out as dividends or salaries.
This year, we have been eagle-eyed in our search for businesses with low or no borrowings. In the past, highly geared companies could use rising asset values or increased profits to keep bank managers happy. Now they don't have that option, so we have rejected all businesses with high gearing. Ideal candidates, of course, have their bank manager as servant, not master. None has a better relationship with their bank than brothers Alastair and Michael Powell, for instance.
These Teesside entrepreneurs run the nigh-on invisible Cleveland Cable Company, which distributes specialist cable. With gearing of just 0.14% and nearly £18m in the bank (and net assets just shy of £99m), Cleveland is clearly in good shape to weather the downturn. The brothers' success comes just a couple of years after they hived off a property operation, which has another £69m of net assets. Yet the Powells never utter a word to the media. They let their actions speak for them.
Our third measure is a valuation of the entrepreneur's stake in the business and other assets, based on the stock market values (if quoted) or their equivalent. Such valuations come with many caveats but serve as a rough-and-ready guide. Collectively, the Top 100 are, by our reckoning, worth just over £11bn, down sharply from last year's £17.2bn, showing that this downturn is hitting the wealthy too. What unites all in our list - veterans and young 'uns alike - is their record of success. But with the perfect storm in the world economy, they'll need to draw on their resilience and experience as never before.